Illinois Lawmakers Seek Enhanced Oversight on Homeowners Insurance
Illinois Reconsiders Homeowners Insurance Regulatory Reforms
Illinois lawmakers are revisiting legislation aimed at strengthening state oversight over homeowners insurance premium changes. This initiative responds to concerns following State Farm Insurance's decision to raise premiums in Illinois by an average of 27.2% due to significant weather-related claims. The move highlights the importance of regulatory compliance in maintaining fair insurer practices.
Previously, a proposal that would empower the Illinois Department of Insurance to monitor insurance rate hikes passed the state Senate but was four votes short in the House, delaying its enactment. Nevertheless, the proposal remains active, with possible legislative action forthcoming. Rep. Robyn Gabel, a key sponsor, has reintroduced the bill, sparking anticipation of renewed discussions among industry stakeholders.
Illinois currently operates as a "use-and-file" state, allowing carriers to implement rate changes before notifying regulators. This differs from states requiring pre-approval to prevent premiums that are inadequate, excessive, or unfairly discriminatory. The proposed legislation aims to prohibit such rates while ensuring rates rely on state-specific actuarial data wherever feasible, addressing critical compliance requirements.
State Farm has faced scrutiny for allegedly transferring costs from out-of-state disaster claims to Illinois consumers, a charge denied by the company and industry officials. Kevin Martin, Executive Director of the Illinois Insurance Association, asserted that rates strictly adhere to actuarial data based on Illinois-specific losses, aligning with industry risk management practices.
The proposed bill would retain the "use-and-file" system but mandates that insurers notify consumers 60 days before any rate increase of 10% or more. A particularly contentious aspect for the industry is the provision allowing the Department of Insurance to review, approve, or amend rates post-implementation, citing concerns over its potential impact on payer operations without a time limit for historical rate review.
As legislative sessions resume, the bill is expected to gain momentum, possessing significant implications for insurers operating in Illinois. Governor JB Pritzker continues to champion reforms to protect Illinois homeowners from disproportionately high premiums driven by external loss impacts. Industry professionals will closely monitor these developments, focusing on balancing regulatory oversight with maintaining a competitive market environment for providers and carriers.